the innsight interview

Innsight caught up with Minister for Arts, Sport and Tourism, John O’Donoghue TD to discuss his outlook for the sector for 2003

It’s fair to say most sensible people fervently hope the Iraq crisis can be resolved without war. Minister for Arts, Sport and Tourism John O’Donoghue will certainly be hoping that is the case.

Ireland’s tourist industry has just come through two fairly rough years but the outlook is beginning to look brighter again. The Government has set Tourism Ireland the target of growing 2003 visitor numbers by 5pc and revenues at double that rate. Optimistic targets, some people might say, but John O’Donoghue believes they are deliverable. That is provided we do not have a drawn out war in the Middle East. That’s the big imponderable right now for the industry.

"Our growth targets – targets that would represent a record for this island – are predicated on there not being a conflict of any duration", cautions the Minister.

Although visitor numbers were down 5pc in 2001 and recovered by only 2pc last year, he rates this as a solid performance in very difficult and competitive circumstances. Foot and mouth and September 11 obviously hit the industry badly, while the chances of recovery have been held back by the sluggishness in the US economy’s recovery and economic slowdown around Europe and elsewhere.

Nonetheless, the Minister believes Irish tourism "has proved itself to be very resilient" in the face of all these negative trends.

But with Tourism Ireland priming demand overseas with an increased budget, legislation soon expected to be in place to launch the merged CERT and Bord Failte as Failte Ireland, and his recently-established Tourism Review Group carrying out a root and branch examination of the industry, Mr O’Donoghue believes the Government has the right focus.

Everyone accepts that sufficient access into the country is crucial to support this recovery and growth into the future. This is particularly critical on the transatlantic routes where the Minister acknowledges the reduction in capacity after the atrocities of September 11 did us no favours at all.

But he is happy the balance has been more than restored now that Aer Lingus has resumed its services from Baltimore\Washington and United Airways is instigating a new service from Philadelphia to Shannon and Dublin. These new routes are in addition to the existing access from six gateway cities in North America.

Mr O’Donoghue says that after a recent trip to North America, on which he met all the leading tourism players, he has no reason not to feel confident about this market. "They were very confident and made it clear that if we were to maintain our marketing spend that market would recover and grow". Tourism Ireland’s marketing budget in the region has been increased by 20pc, and has the kudos of two high-profile personalities, Padraig Harrington and Martin Sheen, helping to drive publicity.

"I would be confident that we will increase our share of the US market", predicts the Minister. He admits the importance of the American traveller who tends to stay longer, visit more places and spend more than other visitors to these shores.

In terms of regional access in this country, he feels there is a good spread of airports but he accepts that many of the routes need to be further developed. He cites Farranfore as an example of a successful regional service, suggesting, "I would like to see that emulated around the country".

As far as Dublin airport is concerned, the Minister would like to see "a quick turnaround facility" put in place.

Mr O’Donoghue is in no doubt that the Irish tourism product is of the highest standard. "More than €4 billion has been invested in it over the past ten years with the result that we now have a very sophisticated product, and one that has improved beyond recognition". So why undertake a review of the sector at this point? The Minister believes such an evaluation is vital because of the increasing competitiveness of the international market.

The Committee under ex Forfás boss, John Travers, will examine all aspects of the industry including access and standards etc. and is expected to report its findings before the end of 2003. "Our future success is dependent on the industry getting its structures right. Things have got very competitive and unless you are in there fighting, and have the right product to offer, you run the risk of losing out to other destinations", stresses the Minister.

He is conscious that the transparency being provided by the Euro has focused considerable debate and criticism of prices in this country. While noting, "Ireland is never going to be a low-cost destination", he acknowledges that there is concern about the value for money available in some quarters of the industry. "I have no doubt there is value and very good value, out there, but I equally realise that some people could do better in this regard".

"In the final analysis, I can’t direct people to give value – they have to look inward themselves. I hope those who are over-charging will see sense and realise there is no point being penny-wise and pound-foolish", says the Minister.

23, the award winning contemporary restaurant at The Gresham Hotel has just added 2 RAC Ribbons to its long list of accolades. The RAC Ribbons are in addition to a recent AA Rosette and the restaurant’s wine list being voted one of the top 15 in Ireland by the readers of Food and Wine Magazine. Restaurant Manager, Damian Corr, was also a finalist in this year's "Woodford Bourne Sommelier of the Year Award".

The RAC dining award is particularly sought after and properties displaying the Dining Award symbol offer a commendable dining experience and quality food. The RAC explain the criteria for the award of 2 RAC Ribbons as follows: "At this grade, you should expect a more serious approach to cooking, with a higher degree of technical skill and a combination of good quality ingredients enhancing the natural flavour of the food. The menu should have a selection of imaginative dishes as well as more traditional combinations, presented in comfortable surroundings by knowledgeable staff."

Construction has commenced at the Park Hotel, Kenmare, Co. Kerry, on SÁMAS, a deluxe spa scheduled to open in October 2003. As the translation implies SÁMAS is pure indulgence of the senses. Located beside the hotel on a wooded knoll, the design of SÁMAS will take full advantage of a wonderful location overlooking the water.

SÁMAS is to be a world-class spa unlike any other in Ireland, including separate male and female facilities to create a special and unique experience for guests. Facilities will include Heat Experience Room with Crystal Steam, Lifestyle shower, Sauna, Ice Fountain, a glass-walled Relaxation Room, terrace, access to the outdoor Vitality Pool and six sound proofed Treatment Rooms each designed for a range of holistic treatments. In addition there is a Beauty Suite, Tai-chi Pavillion with Terrace and a Fitness Gym.

The design team includes Oppermann Architects together with spa consultants E’SPA who are responsible for constructing the spas in Sandy Lane, Burj Al Arab in Dubai and the Mandarin Oriental in London and Miami.

The Evening Herald Home and Away Travel Awards, have awarded the ‘Best Hotel 2002’ award to the Galway Radisson SAS Hotel. Established in 2001, this 4-star hotel rests in the perfect location for both the business and leisure guest.

Stephen Rae, Evening Herald Travel editor comments, "The Galway Radisson SAS has introduced new levels of service to Irish hotels. Its stunning rooms have views across Galway Bay and the modern Scandinavian design will impress…South African manager Michael de Haast has taken the hotel to a class leader. Breakfast is superb, and it’s the perfect base for Galway nightlife or touring the west"

A survey of 1,400 international business travellers undertaken by American Express has revealed that a third of all business travellers believe that hotel standards and services have improved over the past two years, compared with just 4% who believe that standards have slipped.

Only 9% of US travellers expect their international business travel to decrease during 2003, while 11% of Europeans anticipate a decrease in the next 12 months.

In the same survey respondants admitted that they feel safer travelling, now that increased safety advisory information is being supplied by travel managers to alert travellers on how to access help when out of the country.

Source: American Express International Business Travel Survey

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Choice Hotels Ireland will operate the new €13.6 million hotel development situated at Glenville, on the N11 approach to the town of Wexford. The development is being built on a 5-acre site by Ellen Construction Limited and is currently nearing completion.

The new Hotel, which will be operated as a Quality Hotel, will be a luxury, 3-star 108-bedroom hotel and will include a restaurant and an extensive leisure centre. In all, 100 new jobs will be created at the hotel, which will be managed by Limerick man Fearghal O’Sullivan. O’Sullivan has extensive international experience, having worked with the Forte Hotel group, and more recently managed Dunbrody House and Kinnity Castle in Birr, Co Offaly.

The Quality Hotel brand operations team also manages hotels in Cork, Galway, Donegal, Dublin and more locally the Quality Hotel on Waterford’s Canada Quay.

Pictured at the pre-launch of the new Quality Hotel and Leisure Centre in Wexford are left to right: Frank Whelehan, Chief Executive, Choice Hotels Ireland, Brendan Howlin TD, Michael Doran and Martin Doran, Joint Managing Directors Ellen Construction.

Three dedicated employees from the Castleroy Park Hotel, Limerick have raised a staggering €20,000 in funds for cancer research and treatment in Ireland. Executive Chef Tom Flavin and Deputy General Manager Dermot Madigan took part in the Dublin City Marathon last October to raise funds and the following week Barbara Shine, Assistant Leisure Club Manager, completed the New York City Marathon.

Limerick patients in need of radiotherapy treatments currently have to travel to either Cork or Dublin. By providing a Radiotherapy Centre at the Mid Western Regional Hospital, Limerick, the necessity for patients to travel would be reduced. With this objective in mind, Tom and Dermot set out to help the provision of Oncology facilities in the Mid West Region, by donating their €16,000 contribution to the Mid Western Hospitals Development Trust. Barbara’s sponsorship money of €4,000 was donated directly to the Irish Cancer Society.

Edward Farrell (pictured) has been appointed Resident Manager at the Woodstock Hotel in Ennis, Co. Clare. Edward joined the hotel group in early 2000 as Food and Beverage Manager at the Hibernian Hotel, Dublin. He trained in a number of hotels prior to joining the group, including Dromoland Castle, Co. Clare, and is a graduate of the University of Ulster.

The Hibernian Hotel, Dublin has also appointed a new Resident Manager. Briege Dobbin joined the hotel in 1992 as an Accommodation Manager and was part of the pre-opening team. During 2000 she played an important role in the opening of the Woodstock Hotel in Ennis.

Knockranny House Hotel in Westport, Co. Mayo has made a couple of new additions to the team. Fergal Harte, a graduate of the CERT Trainee Manager Development Programme in 1995, has been appointed Sales and Marketing Manager. Prior to his appointment Fergal spent seven years working in London, initially at the Cumberland Hotel, and later at an international design company specialising in Corporate Events.

Sean Reilly has been appointed Duty Manager at Knockranny House Hotel. He has previously worked in London and in Ashford Castle, Co. Mayo, and holds a Diploma in Hotel Management.

Kurt Ritter, President and CEO Rezidor SAS Hospitality, and Corporate Hotelier of the World 2002, will address IHF members at this years AGM in Galway on March 3rd, joined by several speakers of note, including Minister for Arts, Sport and Tourism, Mr John O’Donoghue TD. Ritters fast-track climb in the hotel industry reflects a balance of hard won experience and a curiousity about meeting the next challenge…

Kurt Ritter, the man in charge of Rezider SAS, has an ambitious ten year vision for the hotel group writes David Churchill

This month Kurt Ritter will be named Corporate Hotelier of the world by the prestigious International Hotel & Restaurant Association, beating off challenges from short-listed rivals including Ian Schrager, Sol Kerzner and Richard Helfer, chairman of Rafflers Hotels.

For Ritter, having just announced an ambitious plan to take the Rezidor SAS Hospitality group – of which he is president and CEO – into a new era over the next decade, the award could not have come at a better or more auspicious time. Ritter plans to boost numbers of Radisson SAS hotels – Rezidor’s four-star business chain in Europe – from 114 hotels at present into a 709–strong multi-branded hotel group by 2012.

Such growth – if achieved – will turn Rezidor into one of the leading hotel players in the world, fully justifying the decision by IHRA members to give Ritter this year’s top award at a New York ceremony mid-month.

But he has already more than earned it by transforming a clutch of airline-owned hotels into an international chain over the past eight years, following a 1994 groundbreaking franchise deal with US Carlson group to operate and expand Carlson’s Radisson brand in Europe.

The move amply paid off, enabling Ritter to establish one of the fastest-growing international hotel chains, adding 20 or so hotels a year by doing deals with individual property owners and avoiding, he points out in his heavily-accented English, "some of the problems of rapid growth experienced by other groups such a Swissotel." At the same time Ritter slowly expanded his chain geographically from its strong Scandinavian base into the UK and Western Europe.

Yet he also realised in the late 1990's that this pace of growth was less than he could achieve by rather more judicious expansion, especially following his decision in 1998 to sell Rezidor's property assets and focus entirely on managing hotel operations. "We saw the need in 1998/99 to do a deal to take us a stage further and I thought that the business model we had developed for the Radisson through our agreement with Carlson could be expanded to include other Carlson brands." Explains Ritter.

"But Carlson wasn’t interested at the time and I can’t really blame them as it was a big territory (the Europe, Middle East and Africa area) which we were asking them to give us franchise for. I think while we felt the timing was right for us, they didn’t feel the same way then."

So Ritter pursued a different strategy, with smaller deals with hotels owners in several European countries to grow the Radisson SAS brand name. But this was not enough to achieve the sort of growth Ritter was looking for, so he considered another major franchising deal with an American operator; this time it was Choice Hotels Europe, with its Clarion, Quality, Comfort and Sleep Inn brands.

Ritter, however, was not convinced by Choice’s multi-brand strategy, believing that there was too much overlap among the competing mid-market brands which lacked cohesive identity. "So I was at the Carlson annual meeting at Las Vegas last February and said to Curtis (Nelson, president and ceo of Carlson Hospitality Worldwide) that perhaps we should try again to resurrect the deal I had in mind in 1999," recalls Ritter.

Carlson, in the wake if 9/11 and global economic slowdown, decided that its European hotels expansion could probably be better handled by Rezidor, with Carlson earning fees from the franchise deal, rather than seeking to expand itself.

Ritter agreed:

"We know the European markets, what works and what doesn’t, and felt that we could take the Radisson model and apply it to other Carlson brands."

He also found it comfortable to work within the Carlson ‘family’ culture which stressed long-term commitments. "I said the only way this can work is if we do it the same way as the original deal back in 1994 – just adding brands to this existing agreement which I felt has worked so well for us."

Ritter, however, was determined to avoid the same sort of situation recurring as exists in London, which means that the Radisson franchise within the M25 area belongs to another investor, operating under the Radisson Edwardian banner. Because SAS International Hotels already had the Portman Hotel in London, it was agreed that this could, exceptionally, operate as a Radisson SAS property.

"But we didn’t want this to happen again since, for example, there is a German saying that ‘One exception is no exception’", explains Ritter. Hence, when it came to negotiating the new agreement for brand expansion in Europe, the Park Plaza brand was excluded as the franchise already belongs to another operator.

Under the terms of the Carlson agreement, Rezidor will operate Carlson’s Radisson, Regent, Country Inn and Park Inn brands for the next 30 years in EMEA region. It will also take all the existing management and franchise contracts in the region.

Ritter is convinced of the future for the muti-brand strategy in Europe.

"In America, the hotel sector is dominated by the major chain brands who have targeted specific niches with different products," he explains, quoting the figure of 80%-plus brand penetration in the US market.

"In Europe, brand awareness is growing but it is still much lower – about 30% on average but much greater in the UK where brands who have really taken off and are following the American model."

Ritter believes the three new Carlson brands he is taking on (plus Radisson) will complement each other rather better than the Choice brands he rejected. "It means we can appeal to the business and leisure markets across the board, building our customer base and offering both luxury and mid-priced accommodation for those on a budget," he says.

While Radisson SAS will continue to be the main business-class ‘workhorse’ of the group – competing against the Road Warrior’s favourites of Hilton, Marriott and Sheraton, the upscale Regent properties will add a touch of class for when recovery comes. Although established in 1970 in Asia, Regent has been a peripheral layer for a long time before Carlson took it on a couple of years ago. There is already a Regent in Berlin – as well as one in Kazakhstan – although the remaining eight are in Asia and the US.

The Park Inn and Country Inn brands, however, are firmly mid-market. Country Inns are, as the name suggests, rather more ‘homely’ properties, usually located away from business districts and providing larger rooms for business travellers on the move who want a little extra space, as well as attracting the family market at weekends. Park Inn is a relatively newer concept for Carlson, offering three-star limited service in city and town centres.

These two brands are seen underpinning the Rezidor strategy over the next decade – solid mid-market hotel chains with some 325 hotels planned.

 But Ritter at present has no plans for a mainstream budget chain similar to Travelodge/Travel Inn in the UK of Accor’s budget portfolio in France. Adding on another brand at this end of the market outside the Carlson agreement is not on the cards yet, although Ritter does not rule out such a step at some stage in the future.

"I’m not really impressed by many of the budget brands around at the moment," says Ritter."

But it is clearly an area of the market we will monitor, even though I can’t see us going there at the moment."

But there is a gap in the portfolio that Ritter is determined to fill – the so-called lifestyle hotel niche. This follows a rather un-happy two-year joint relationship with UK property group Marylebone Warwick Balfour for the Malmaison group.

Malmaison was the brainchild of Scottish hotelier Ken McCulloch who created stylish, design-led hotels in off-centre locations in Glasgow and Edinburgh in the mid-1990’s but at a price that attracted the new generation of young business travellers in emerging high-tech and media industries. McCulloch moved on, quite literally to Monaco where he is overseeing the launch of two new pan-European life-style chains called Columbus and L’hotel, and Malmaison’s ownership changed hands a couple of times before MWB and Rezidor came together in late 2000 to develop the brand across Europe.

Bus in spite of good trading figures over the past two years, the relationship between Ritter and MWB never really gelled.

"We decided that we couldn’t continue to work together and so decided that one of us would have to buy the other out, which is what effectively happened."

Ritter, however, has kept Malmaison’s senior management – including chief operation officer Karl Foerster – and is planning to set up a Malmaison-clone shortly with a name he declines to reveal at present.

While branding forms the core of Rezidor’s expansion, equally as important is developing the group geographically. The new country strategy works on different levels: using the new brands to expand in the home markets of Scandinavia, Finland and Germany; growing into the countries, including the UK, France, Benelux and Poland, where existing representation can be significantly developed; and targeting key capital and other cities, such as Athens, Barcelona, Cairo, Rome and Zagreb. In addition, Ritter is keen to focus on airport hotels as a growth sub-sector.

France, for example, still has considerable potential for more Radisson SAS properties, let alone the new brands. There are just six Radisson SAS hotels in France, compared to 37 rival four-star Sofitel properties and 30 under the Concorde banner. "In Italy, also, we are not currently represented, as our original hotel investor decided to switch from hotels to the fashion business, selling his stake and ending out management contracts with the new owner," explains Ritter. At present, there are over 40 Radisson SAS projects in the pipeline.

Ritter also remains unfazed by the gloomy position of continental economies – especially Germany – and the threat war with Iraq. "We are taking a long-term view with what we are doing and a weaker European economy may present more opportunities for us now than in the future," he points out. The expansion plans are not capital intensive – being largely financed out of Rezidor’s current cash flow – although parent SAS Group will not get a financial return for the next two or three years while the expansion is underway.

Ritter is also confident of having the management structure and capacity to manage the expansion.

He prefers a lean structure – "people should be a little over-stretched rather than underworked"

– and believes the established business model does not require much extra in the way of centralised management.

One significant change could be for SAS to float Rezidor on European stock exchanges with the next two or three years, although no move is likely while markets remain depressed and the new strategy is being implemented.

But Ritter, 55, is unlikely to still be in charge when the decade of expansion is over. "I think I’m already one of the longest serving hotel CEO’s anywhere in the world," he points out. "I think I might be a little too old to see it through to the end, but I’ll certainly be there a good part of the way."

His retirement plans do not include that favourite fantasy of top hotels executives – going back to run his own hotel again. "I wouldn’t want to do that, as that’s just going back," he says.

But whatever he decides to do in retirement, it will be well planned. You wouldn’t expect anything else from a man who has mapped out his company’s growth strategy in such detail for the next ten years.

This article appears courtesy of Business Travel World magazine.